PBOC Structural Interest Rate Cut: Lowered Various Structural Monetary Policy Tool Interest Rates by 0.25 Percentage Point

**January 15 —** Zou Lan, spokesperson and deputy governor of the People's Bank of China (PBOC), announced at a State Council Information Office press conference today that rates for various structural monetary policy tools have been cut by 0.25 percentage points. The annual interest rate for all reloans has been lowered to 1.25%, with rates for other tenors adjusted accordingly. Enhancing structural tools and boosting support will further help optimize economic structural transformation. Zou added that there remains room for reserve requirement ratio (RRR) cuts and interest rate reductions this year. On the RRR front: the current average statutory deposit reserve ratio for financial institutions stands at 6.3%, indicating room for further cuts. For policy rates: externally, the RMB exchange rate is currently relatively stable, and the U.S. dollar is in an interest rate-cut cycle, so the exchange rate does not pose a significant constraint. Internally, since 2025, banks’ net interest margins (NIMs) have shown signs of stabilization. In 2026, large volumes of 3-year and 5-year long-term deposits will come due. This round of structural tool rate cuts will help reduce banks’ interest payment costs, stabilize NIMs, and create room for interest rate cuts.